Stephen Colbert, it turns out, is now the most effective voice anywhere in calling out lawyers for their cynical abuse of tax-exempt law to circumvent political contribution disclosure requirements. Who’d have thunk it?
For much of this year, Colbert in his role as a fake political figure has used his late-night Comedy Central program to conduct a clever, entertaining and, therefore, effective tutorial on the tax code, for goodness’ sake. He started out by creating Colbert Super PAC, aka. Americans for a Better Tomorrow, Tomorrow, as an independent, expenditure-only political committee, which, pursuant to Sec. 527 of the tax code, must disclose the names of its donors. He then created another entity called Colbert Super PAC Shh as a tax-exempt, social welfare organization under Sec. 501(c)(4) because it allows him to keep the identities of its donors secret. This setup allowed him to demonstrate how the insiders engage in legal money laundering by passing anonymously donated (c)(4) funds to the Sec. 527 political entity, which then reports the contributions, as it must, as coming from the (c)(4)—without names attached.